The cap is 2–4.5 cm (0.8–1.8 in) across, convex to flat, and with a central navel. It is often incurved at the margin, and is various shades of ochraceous-buff, and tan, depending on moisture content. The fibrillose stipe is the same color, and with a distinct lilac down towards the base. The flesh is whitish, tinged with pink, or ochraceous, and has no apparent distinctive smell, or taste. The gills are pale lilac at first, fading paler. The spores are white.[2] The picture on the right shows young specimens with quite vivid coloration. More often, they are found duller in appearance.[2]

This species forms ectomycorrhizal associations with a wide variety of tree species, such as red pine, jack pine, and black spruce.[7][8][9] Studies have shown that L. bicolor is more effective in early colonization of pine roots compared to other ectomycorrhiza forming fungi.[7][10] In field studies, it preferentially colonizes and improves the survival of red pine.[7][8]

Laccaria bicolor was the first ectomycorrhizal fungus to have its genome sequenced.[11] The genome is 65 megabases long and is estimated to contain 20,000 protein coding genes. Analysis revealed a large number of small secreted proteins of unknown function, several of which are only expressed in symbiotic tissues, where they probably play a role in initiating symbiosis. It lacks enzymes which are able to degrade plant cell walls but does possess enzymes which can degrade other polysaccharides, revealing how it is able to grow both in soil and in association with plants.[12]